What is the City’s Role in Economic Development?

by Rob White

Over the past few weeks there has been an ongoing dialogue about the significant community discussions regarding innovation parks with little attention being paid to other economic development activities in Davis. And part of that discussion has focused on what is the City’s role in economic development?

First, I think it is important to remind ourselves that economic development has a very specific meaning, and as such, not every activity being discussed is actually economic development. Some of the items being discussed are community development, some are sustainability goals and some are just good community building with focus on place-making.

I think back to when the recession started to take full effect in 2008 and the federal government started to look at ways to jump start the economy. By 2009 and 2010, there was a flotilla of tax relief and the creation of the “Stimulus” (or American Recovery and Reinvestment Act [ARRA] of 2009). According to Wikipedia, “the primary objective for ARRA was to save and create jobs almost immediately. Secondary objectives were to provide temporary relief programs for those most impacted by the recession and invest in infrastructure, education, health, and renewable energy.”

Many started to loosely refer to ARRA as “economic development”, though the activities were most certainly not all economic development. Many of the activities were close cousins of economic development, such as economic investment and community development, but not actually true economic development.

And while some activities certainly had outcomes that could be tracked as economic development, the majority of the Stimulus’ efforts resulted in taking our own money and reinvesting it (I know, we can argue about whether we actually borrowed the money from foreign governments, but that would make my point even stronger). This is economic churn, not economic development.

Again, Wikipedia would point out that “the rationale for ARRA was from Keynesian macroeconomic theory, which argues that, during recessions, the government should offset the decrease in private spending with an increase in public spending in order to save jobs and stop further economic deterioration.”

Since the most basic meaning of economic development is the focus on the creation of new wealth and new investments from outside an existing economic system, you can clearly argue that ARRA was not strictly speaking an economic development activity.

I realize that this is semantics more than anything, but it is important to make sure that those responsible for certain tasks and outcomes have clear understanding of their roles so that execution is not confusing and efforts are maximized across all invested and interested parties.

As I have described in past posts and articles, the City of Davis’ “Innovation and Economic Vitality Work Program” lists specific focus areas that the City Council has directed staff to devote time to over the next 24 months (from July 1, 2014 to June 30, 2016). Staff are scheduled to report back to the City Council on a regular 6 month basis (with the first report out in January 2015) to discuss activities, outcomes and measures and seek affirmation or redirection of priorities based on the Work Program activities.

To remind you of what those focus areas are and where you can find the approved Innovation and Economic Vitality Work Program, I have listed the info here:

Focus Area 1 – Facilitate Technology and Business Development

Focus Area 2 – Increased University Engagement

Focus Area 3 – Expand Support Network for Local Business

Focus Area 4 – Strategic Branding and Marketing

Focus Area 5 – Leadership

Innovation and Economic Vitality

Realizing that not everything can be worked on by any single organization, and that even within the focus areas described by the Work Program there is need for collaboration and partnership, the City was very directive in describing its role in the activities described by the Work Program (and the companion Action Plan).

What this means is that the City has recognized that its role is most productive as a facilitator and convener, taking itself out of the realm of the market place which can often deliver many aspects of economic development at a lesser cost and in a more timely fashion than government. This is how the City has set such an ambitious agenda for 24 months while not suggesting we grow the City’s implementation structure (e.g. staff, resources and funding).

When you review the list of ten objectives developed by the Chamber, Downtown Davis and Yolo County Visitor’s Bureau, the question shouldn’t be ‘what is the City doing to meet these objectives?’ Because these objectives were developed by our business and tourism associations and have not been formally vetted or adopted by the City Council in any fashion. They are a statement, by the business and tourism associations serving Davis, of their objectives and we should be asking them (not the City) what progress has been made on each of the ten objectives.

This is not to say that the City doesn’t agree that these objectives are important. It is important to note that the objectives are most certainly in alignment with the City’s stated economic development activities and interlace with the spectrum of activities, objectives, focus areas and measures that we are all doing to try and create a fiscally sustainable Davis.

To validate my line of reasoning, the City wouldn’t ask these business associations, the university or other community groups how they are fulfilling the City’s stated focus areas, objectives, outcomes or measures from the recently approved Work Program, right? Though many of these groups may have influence on the City’s efforts, it is not their primary role nor have they officially adopted these activities in any way.

I again note that the City has also been very directive in developing our Work Program to specifically identify the areas that we can have meaningful impact with limited resources. And since the City Council adopted the Work Program just three months ago, it is not a surprise that the biggest effort to date is around the innovation parks, the first focus area of the City’s Work Program.

As the process to assess and analyze the innovation park projects gets more formally underway with actual applications and work by planning, community development and public works staff, economic development staff have already started to shift the limited resources of the City over to business retention and growth as well as attracting new investment.

And not that the point of previous posters about the fiscal impact of the downtown on the local economy and the City’s revenues isn’t valid or important. But that impact is already realized in the revenue of the City and we are talking about new revenue growth as part of the economic vitality discussion. The City needs new revenue to pay for existing infrastructure, parks, pools and pathways, as well as replacement of these and many other community assets.

To put things in to perspective, a new DMG Mori facility generates as much property tax, sales tax, jobs and economic impact as several square blocks of the downtown. And though we should not pit one business activity against another, the efforts by existing downtown land owners, businesses and other stakeholders are on a much smaller economic impact scale than what a new tech business brings to Davis.

Make no mistake, we need both. We need our tech companies to create new investment and jobs that will drive more activity in our downtown. They become symbiotic and each supports the other in a healthy and sustainable economy.

As we progress forward, staff will be working in collaboration with the business associations and other community groups this fall to have a discussion about revitalization opportunities in the downtown and other commercial areas of the City. This will include looking at processes and policies that the community and City Council have previously put in place that may discourage business investment and possibly even make it difficult for revitalization to occur.

With the transition of leadership at the Davis Chamber, there is opportunity for renewal and re-commitment by each organization to partner on shared objectives and activities. Newness breathes fresh ideas and energy in to any system. The Chamber has done a great job in setting a new pathway towards the future and the soon to be finalized 2020 Plan that has been described in previous posts will allow the City and Chamber to sit down and formally identify areas of partnership and collaboration.

I am confident that since both of these documents (the City’s Work Program and the soon to be released Chamber’s 2020 Plan) were structured against the regionally adopted Next Economy plan, that shared objectives and activities will become apparent.

The new Chamber executive and I have worked together for a long time and we both have strong resumes in economic development. Building on the successes to date of the Davis Chamber, Matt and I will be able to use our strong regional and national economic development credentials to bring even more focus on Davis. Each time a new player is added to the team, they bring excitement, energy and new ideas that boosts all of the current activities. That is why sports teams have second and third strings, to keep players fresh and the energy high.

Though City staff have been working on the City Council approved Innovation and Economic Vitality Work Program for only three months, I am confident that over the coming years the activities and measures will demonstrate the City’s commitment to economic development specifically, and overall economic vitality as a community benefit.

Thanks for considering my thoughts. Your reactions and questions are always welcome. My email is rwhite@cityofdavis.org if you choose to email me directly.

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